Fear of CFMEU reprisals keeps building bosses silent

Michael Bleby, Nick Lenaghan and Larry Schlesinger

Jul 23, 2024 – 10.32am

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The country’s biggest builders and developers say the CFMEU’s grip on the construction sector has sent costs skyrocketing and damaged productivity, yet they remain reluctant to speak out publicly, fearing retaliation from the militant union.

“There is a lot I could say but to be honest, I am still very wary of publicly making any comments and could not risk our name [being] attached to any comments for fear of retribution,” said one major east coast apartment developer.

The price of peace? Big builders are hanging on to thin profit margins on costly union-controlled projects. Michaela Pollock

That refrain was echoed by the leaders across construction and property development canvassed by The Australian Financial Review, who are wary of attracting industrial strife to their projects.

“My hesitation is that we have Labor governments everywhere, and I’m not convinced they will follow through with their convictions,” the chief executive of one of the country’s biggest builders told the Financial Review.

“If I go out there out and put all this on record and then in six months this turns into nothing, and they [the government] feel they’ve done enough to appease the public, then I’d be cooked. The retaliation. I wouldn’t be able to work in this industry again.”

The boss at another major construction firm said: “I can’t say anything on record. This gets really, really sensitive.

“We’re exposed industrially everywhere. Every builder is the same. Builders have got no power at all. All we want is a fair and reasonable relationship.”

The builders’ reluctance to go on the record follows days of explosive investigations into the activities of the CFMEU by the Financial Review, The Age, The Sydney Morning Herald and 60 Minutes, revealing underworld connections, standover tactics and alleged kickbacks.

The scandal has prodded the Albanese government into action, with a commitment to clean up the CFMEU by putting it under external administration. The Fair Work Ombudsman has been asked to review all CFMEU enterprise agreements connected to Victoria’s $100 billion Big Build infrastructure pipeline, after the investigation raised concerns about union strong-arm tactics.

As well, Infrastructure Minister Catherine King has directed her department to review construction projects overseen by government business enterprises, including the new Western Sydney Airport and Inland Rail.

So far though, Prime Minister Anthony Albanese has resisted calls to reinstate the industry watchdog, the Australian Building Construction Commission, which Labor abolished when it came to government in 2022.

Labor also gutted the federal building code, which top builders say was critical for curbing construction union power.

“The code at least gave us a starting point, where you couldn’t sign an agreement which gives the unions so much power,” one senior builder said.

Queensland ‘complete disaster’

Industrial conditions are significantly worse in Queensland than the other states, the builders and developers said, confirming reports that productivity on some CFMEU-controlled projects now averages just three days a week.

“It’s just too much. You are not in control of your job in Queensland any more,” one top builder said.

Builders singled out the new rules on wages and workplace conditions the state Labor government introduced under the Standard Best Practice Industry Conditions, which effectively pushes contractors to adopt CFMEU-style conditions on public projects worth more than $100 million. The regime is also fuelling a union turf war as the CFMEU expands it reach into civil projects, traditionally the domain of the rival AWU.

“The Queensland BPIC policy is a complete disaster for the industry,” a veteran at one large national contracting firm said. “Our productivity levels are lower now than they were 40 years ago when I first joined. It’s just a disgrace when you start thinking about it.”

Another senior executive at a national construction company said: “Queensland is the most militant part of the CFMEU. It has never been great, but has got worse. The union has an absolute stranglehold on the industry.”

But as much as the major builders are in thrall to the militant construction union, senior industry leaders acknowledge the perception they could be seen as complicit in the situation.

Many say they need to ensure a working relationship with the CFMEU.

“They represent the guys so you’ve got to speak with them, but you don’t cut a deal,” said Scott Hutchinson, the executive chairman of Queensland-based builder Hutchinson Builders. “You just stick to the EBA that you’ve legally come to.”

Mr Hutchinson said his commercial building company only had a small civil division and rarely dealt with the AWU.

Suffering from ‘Stockholm syndrome’

One major builder described the relative industrial peace in Victoria as akin to “Stockholm syndrome”, as major companies desperately seek to preserve super-thin profit margins on major projects.

“We don’t have enough money to cover what would occur if we said ‘F--- you, let’s have a fight for three months.’ If we down tools for two weeks, then we’re losing [profit] for a year.”

But keeping the peace and maintaining productivity on sites comes at a cost, with one major east coast residential developer pointing out that labour is the main driver in soaring construction costs. CFMEU-controlled projects would typically cost between 25 per cent to 35 per cent more to build, the developer said.

“That 30 per cent just translates to housing prices. It just gets added to the price.

“The biggest issue is if the CFMEU or any union in Australia really do care about their members, they have to look at how do we get the economics to work for the consumers to be able to buy. So that the developers and builders can build, and the unions can have work. Otherwise, the whole system breaks down and nothing works.”

The boss of a major residential land developer, with projects along the east coast, said his company “avoided the CFMEU like the plague”.

“They have infiltrated high-rise building sites, but have not been in the residential land business much.”

He said the CFMEU was able to control tall building sites because there was usually just one entry point onto these sites, something that was not typically the case in greenfield sites.

“I hope and pray they don’t come into the land space.”